Holcim less optimistic on European construction market

Holcim said on Wednesday that it was less optimistic about the prospects for the European construction market in 2013 as it reported worse-than-expected earnings for its fourth quarter.

"While group regions Asia Pacific, North America and Latin America are expected to witness higher sales volumes, Holcim is somewhat less optimistic with regard to Europe and Africa Middle East," the Swiss company said.

Like many building supply companies, Holcim has been hit by a slowdown in the European construction market, its second biggest region after Asia-Pacific, as governments have reduced their spending.
French rival Lafarge has sold non-core assets and stepped up its cost-cutting programme after its European sales fell 17 per cent during 2012.

In December, Holcim took a charge of CHF410m (US$440m) to reduce production capacity as its cement and aggregates sales fell in the Europe. It also incurred CHF100m in extra restructuring costs.

Holcim's sales in Europe, which make up 27 per cent of its total overall sales, fell five per cent in 2012.
Looking ahead, Holcim said it expects higher cement sales and operating profit in 2013, as its cost reduction scheme gathers pace.

"Under similar market conditions, significant organic growth in operating earnings before interest, tax, depreciation and amortisation and operating profit should be achieved in 2013," Holcim said.
In 2012, operating Ebitda totalled CHF3.98bn and operating profit was CHF1.82bn.

For its fourth quarter, Holcim reported a net loss of CHF161m, partly as a result of the restructuring costs announced in December. Analysts polled by Dow Jones Newswires had expected on average a net loss of CHF95m.

Sales in the three months to 31 December 2012 rose 1.2 per cent to CHF5.35bn, below forecasts of about CHF5.46bn.